UNAUDITED RESULTS - bidcorp-reports.com...Bid Corporation Limited Investor Presentation for the half...

UNAUDITEDRESULTS

for the half year ended December 31 2020

Notes

Unaudited Results for the half year ended December 31 2020

Bidcorp is a complete foodservice offering

Bidcorp serves multiple customer segments

Bidcorp is internationally diversified across developed and emerging markets

Bidcorp people are entrepreneurial and incentivised to be so

Bidcorp has a proven decentralised business model and best practice learnings are widely shared

Bidcorp growth is organic, acquisitive-organic through bolt-ons, and acquisitive

Bidcorp believes that balance sheet strength with low debt is a strong competitive advantage

Bidcorp proprietary technology enhances customer relationships and efficiencies

Bidcorp is environmentally conscious

The COVID pandemic has tested our business model to its limits and beyond2

Bidcorp strategyA internationally proven business model that has delivered high quality earnings over three decades and which is proving its strength and resilience during the COVID pandemic

Bid Corporation Limited Investor Presentation for the half year ended December 31 2020 2

Notes


Bernard Berson, CEO Interim results in perspective

Bernard Berson, CEO Trading analysis

David Cleasby, CFO Financial analysis

Q&A

Supplementary information

3

Agenda

3 Bid Corporation Limited Investor Presentation for the half year ended December 31 2020

Notes

INTERIM RESULTS IN PERSPECTIVEBernard Berson


Notes


Notable operational features • The COVID-19 (COVID) pandemic continues to affect all our regions with forward planning especially difficult due to government

responses to combatting the pandemic that have differing and unpredictable degrees of restriction on trading • In general, a stronger first quarter and a weaker second quarter as restrictions were significantly tightened, especially in Europe and UK • Staff costs are 65% of operating expenses and where available we benefitted from government grants to support employment but we also

took the opportunity to operate more smartly, we have not cut muscle as we need our people capacity when demand normalises • Australia and New Zealand took a proactive approach to battling the pandemic and returned to relative normality, assisting the result• Europe, UK, and most Emerging Markets are experiencing a prolonged and economically harmful battle against the pandemic but we have

nevertheless remained profitable• Bidcorp people are in close touch with customers and suppliers to ensure we all get through this together • Due to the continuing pandemic the group has maintained a similar debtors provisioning as at June 2020 • Liquidity levels are good and we are prioritising cash flow; group net debt to equity ratio has reduced to 9% from 20% • Whilst trading is tough and we need to keep costs in check, we aren’t compromising on our environmental sustainability initiatives • Supply chains have been disrupted by COVID and whilst shipping costs have risen, there is no material impact for the group• A strong balance sheet may in theory support acquisition capability yet in practice this isn’t quite the case right now, and there is no

wide-spread competitor distress, but we are gaining incremental market share organically due to our financial and people strength

5

Diversity across multiple geographies, strategic focus, group-wide cooperation, and a conservative approach to finances is serving us well during this very challenging pandemic Cash generated by operations increased to 167% of trading profit from 113%


Notes

TRADING ANALYSISBernard Berson


Notes


Segment overview • Macro economic backdrop has been better than feared• Australia and New Zealand had a shift in mix of trade as, with borders

closed, domestic trade became more important• Group trading profit contribution increased to 49% from 29% • Both Australia and New Zealand teams maximised their opportunities • Supply chain disruptions resulted in some import stock-outs in NZ• Working capital has been well-controlled but there is no room for

complacency on debtors as the future remains murky with respect to the pandemic and its effects on customers

Australia (AUD)• COVID lockdowns affected both international and state borders, with

snap lockdowns still happening • Regional and city variations in trading result depending on the severity

of pandemic conditions but several Foodservice branches managed to achieve similar or better results than H1F2020

• Commonality in systems and decentralisation of senior managers has enabled the teams to respond quickly to challenges

• Q2 sales came in at 92% of prior, up from 82% in Q1, with H1 at 86%• Foodservice traded at a respectable margin despite topline being

down, whilst Supply Solutions performed well with more own brand product being sold, and Meat made encouraging progress

• National accounts strategy bearing fruit with new sales winsNew Zealand (NZD) • Foodservice sales flat with EBIT in line with H1F2020, Fresh most

impacted by lockdown, Logistics stable, Processing is doing well • A good result hides regional variations and the fact that there is no

international tourism • Capex on property (DC’s and land), the Christchurch DC is complete,

Hamilton Fresh depot is underway and a site in Auckland identifiedfor imports business

7

Australasia(Australia and New Zealand)

Trading performance – AustralasiaConstant currency - revenue down 9,6% reflects COVID impacts and mix, trading profit decrease limited to 8,0% with trading margin rising to 6,7% as expenses reduced, a good effort with all hands on deck

1 045,9 1 119,9

6,6% 6,7%

0%

2%

4%

6%

8%

0

500

1000

1500

H1F2020 H1F2021

Trading profit R million (left axis) Trading margin % (right axis)


Notes


Segment overview • Team spirit epitomised by the selfless efforts of Steve Clarke and

Jim Gouldie who were both awarded an MBE in the Queen’s New Year Honours List 2021 for their services to the most vulnerable

• Results reflective of a continuation of trends evident in H2F2020 but intensified as COVID restrictions tightened and pandemic worsened

• Group trading profit contribution decreased to 13% from 25%• Tiered lockdowns are impacting all sectors served, including institutional• Government support cushions the economy and businesses but there

are fiscal consequences and uncertainty on recovery in demand patterns

Bidfood UK • Sales declined 30% with trading profit down 60%, reduced overheads

assisted margin• A positive Q1 but second wave impacted Q2 and into Q3 • Volumes in education, schools, workplace, and hospitality all fell• Two sites mothballed and many staff furloughed • National accounts team has focused on new business and retention of

existing accounts – wins and extensions secured • IT infrastructure/ecommerce progressing well and even more vital

given COVID shifts, B2C “Bidfood at Home” launched December • Exit from EU has had minimal effect, with admin issues in hand Fresh UK • Q1 was promising but Q2 required damage limitation as key

hospitality and workplace sectors were a fraction of normal trade • Half year was lossmaking, Q2 accounted for the bulk of variance• Redundancies were inevitable, workforce now half of previous levels,

with most remaining staff on furlough • Little prospect of much improvement in H2 so the focus is on holding

the line for future upturn

8

United Kingdom(Bidfood UK and Fresh UK)

Trading performance – United KingdomConstant currency - revenue decline of 33,4% with trading profit down 72,2%, trading margin 2,2% vs. 5,1%A poor financial result but a sterling performance from the UK team

909,4

295,7

5,1%

2,2%

0%

2%

4%

6%

0

200

400

600

800

1000

H1F2020 H1F2021



Notes


Segment overview • Horeca universally hard hit but retail in Czech/Slovakia held up• Q2 deteriorated sharply relative to Q1 • Government support assisted but Spain and Germany remained

lossmaking • Group trading profit contribution 19% vs. 31%• Working capital a challenge – short-life stock, cash collection/bad debts• Varying degrees of lockdown likely to stretch into the future, it is thus

impossible to give accurate guidance other than more of the same seems likely throughout H2

Netherlands (EUR) • Sales down 37% in H1 with a 55% decrease in Q2, trading profit down

72% and 91% respectively • Declines heavily concentrated in horeca, national accounts, and

catering, with health care also down but limited to 14% • Associates in meat, fish, and fresh produce contributed zero

Belgium (EUR)• Sales fell by 23% in H1 with Q2 sales down 31%, trading profit down

54% and 73% respectively • Catering and horeca most affected with H1 sales declines of 40% and

35% respectively, institutional down 15%, logistics down 14%

Czech and Slovakia (CZK) • Sales in hospitality fell by 22% but retail grew by 6% limiting the total

sales decline to 14% whilst trading profit fell by 40%; the final quarter ended on a very weak note, other than retail and production

• A fire destroyed the fish factory in Kralupy but production of beef, pork, game, and frozen fish products has continued

• Maintaining capacity to capitalise on future opportunities

9

Europe(Netherlands, Belgium, Czech, Slovakia, Poland, Italy, Baltics, Spain, Portugal, Germany)

Trading performance – Europe Constant currency - revenue decreased 27,1% with trading profit down 65,7%, trading margin 2,2% vs. 4,8%, all territories negatively impacted by widespread lockdowns, teams have had to cope with challenges never before experienced

1 098,9429,6

4,8%

2,2%

0%

2%

4%

6%

0

500

1000

1500

H1F2020 H1F2021



Notes


Poland (PLN) • A half of two quarters, with a strong Q1 and weak Q2 due to

lockdowns, new customer wins pre-COVID has limited the impact• Sales down 21% (freetrade 15%, national accounts 42%), trading

profit down 54%, focus on being nimble day-to-day and cash flow preservation

• Strict cost reduction measures, including lower salaries• Working capital situation (stock, debtors, creditors) handled well Italy (EUR) • Q2 revenue down 26% with trading profit down 58% - a continuation

of the Q4F2020 experience• Cash generated by operations after working capital up 66%; stock

control good, conservative receivables provisioning • Italy hard hit by COVID but we have a solid business that can

capitalise on reopening (as was seen in the July-September quarter) Baltics (EUR) • Sales down 14% in H1 (Q2 decrease 28%) but retail up 2,6% and the

proportion of retail sales in Q2 was 52% vs. 39% of the total• Higher profitability assisted by better gross contribution and lower

expenses• New product and category initiatives for post-lockdown

Spain (EUR) • Tourism the key sector, badly impacted by COVID restrictions, and

together with differing, ineffectual regional responses and internal management instability, hit operations hard

• Q2 revenue down 66% and down 62% for the half, continuing the trend of Q4F2020 whilst losses increased sharply

Portugal (EUR)• Sales at Frustock down 50% in an economy also very reliant on

tourism and hospitality; some retrenchments have been made but it is vital not to undermine future recovery/ potential customer and supplier relationships

Germany (EUR) (50% interest in Austria)• As previously indicated, remedial measures were underway

pre-COVID but lockdowns resulted in sales falling 32% • A strategic decision was taken to reduce trade payables to minimal

levels whilst a focus on receivables has seen good collections• Another loss is inevitable for the full year, but post-COVID, being

situated in wealthy regions geographically, Pier 7 has scope to build a stronger niche presence in the largest foodservice market in Europe

10

Trading performance – Europe Constant currency - revenue decreased 27,1% with trading profit down 65,7%, trading margin 2,2% vs. 4,8%, all territories negatively impacted by widespread lockdowns, teams have had to cope with challenges never before experienced


Notes


Segment overview • A resilient outcome in view of the difficulties faced • Worst of the COVID economic hit occurred in H2F2020 and similar

trends have continued, with Asia best placed relatively but still vulnerable to further infections and restrictions (Hong Kong especially)

• Group trading profit contribution 22% vs. 16% • Even without COVID, our teams are accustomed to dealing with

instability and have reacted flexibly • Easing of restrictions has typically stimulated a quick bounce back, so we

are cautiously optimistic on recoverability

South Africa (ZAR) • One of the worst hit by the virus with minimal government support• Various lockdown levels impacted April to December, into January • The teams did a fine job to limit revenue decline to 17% and trading

profit to 32%, off what was a relatively firm base in H1F2020 in an already weak economy

• Bidfood revenue reduced by 28% with trading profit down 91%, in part due to lower selling income, stock provisioning, and shrinkage; active engagement with the customer and supplier base

• Crown revenue increased by 8% and trading profit by 52% due to a focus on own manufactured products such as “Six Gun Grill” seasoning

• The ChipkinsPuratos JV revenue increased by 8% with trading profit up 26%, assisted by artisanal own product

Hong Kong and Macau (HKD)• Base affected by loss of a dairy distributorship and political protests

with the current period impacted by COVID-related government restriction on movement – Macau particularly affected (casinos, mainland China visitors)

• Sales down 18% but trading profit improved by 31%, benefitting from lower expenses, exploiting new channels and online, development of ready-to-eat and ready-to-cook products

11

Emerging Markets(South Africa, China, Hong Kong, Macau, Singapore, Malaysia, Vietnam,

Brazil, Chile, Argentina, Middle East, Turkey)

Trading performance – Emerging Markets Constant currency - revenue declined by 10,6% with trading profit down by 25,2%, trading margin 4,1% vs. 5,0%, there were territorial and sectoral differences, Asia a standout on economic recovery and coping with the virus

571,8 449,5

5,0%4,1%

0%

2%

4%

6%

0

500

H1F2020 H1F2021



Notes


Mainland China (RMB) • Sales grew 7% with trading profit up 6%, assisted by receding virus

impact, resumption of internal travel, supermarket sales, and growth in second tier cities with Changsha, Xiamen, and Hangzhou a focus but serviced from main depots in Shenzhen, Beijing, Guangzhou, and Shanghai (by order of sales)

Singapore, Malaysia and Vietnam (SGD) • Total sales declined 7% but better pricing margin and lower expenses

resulted in trading profit rising 9%• Singapore opened up in June with further relaxations thereafter;

Vietnam and Malaysia are affected by a decline in tourism• Retail has been positive and new channels have been exploitedArgentina (ARS) – joint control, 38% equity accounted• Inflation adjusted sales up 2% with the Blancaluna profitable,

management handling a difficult situation well and accessed government business for the first time

• Range extension underway, including fresh meatChile (CLP) • COVID followed a period of political and social unrest that is still not

resolved; the company performed as expected with sales varying month-to-month

• Entered the fresh meat market, grocery store distribution, and expanding and modernising depots; investigating an acquisition

Brazil (BRL) • Macro backdrop worsened with periodic COVID restrictions • Sales declined 18% but the business remained profitable; in Q2 sales

were 92% of prior year• The earlier restructuring has paid dividends and the focus going forward

is to capture market share and grow reach (e.g. myBidfood)Middle East (AED) • Following a sharp fall in sales in H2F2020, Q2F2021 showed a return to

growth with UAE and Saudi Arabia above budget on sales and trading profit; Bahrain, Oman and Jordan all profitable

• Wet Fish Trading acquired in UAE, recorded a pleasing result • Vaccine rollout has been widespread, and the oil price recovery bodes

well for the economy of the region, which continues to offer Bidcorp opportunities

Turkey (TRY) • COVID, FX instability, high inflation, and monetary tightening make for a

challenging backdrop but the team beat budget on sales with a trading loss in line with prior year

• Liquor bolstered the result and cash flow• myBidfood is being trialled

12

Trading performance – Emerging Markets Constant currency - revenue declined by 10,6% with trading profit down by 25,2%, trading margin 4,1% vs. 5,0%, there were territorial and sectoral differences, Asia a standout on economic recovery and coping with the virus


Notes


OutlookThe fluidity of the pandemic and differing responses by the authorities in the territories we operate in means we have to plan for a continuation of similar conditions in the second half but the worst does appear to be behind us

13

Australasia

Bidcorp

United Kingdom

Emerging Markets

Europe

• Australia – half year sales were an encouraging 86% of prior and we expect to end the year with sales close to F2020, with trading margin intact

• New Zealand – Q2 concluded positively at almost 100% of prior, a full-year result in line with F2020 would be welcome and at this point in sight

• The group has withstood a daunting period, effectively twelve months of COVID with the pandemic still a reality in most places for at least the next six months or longer

• In several territories labour supply is surprisingly tight so we need to ensure we can keep key staff to capitalise on the many opportunities that will arise once we’re through this

• The UK government is rolling out an impressive vaccine programme which suggests a gradual easing of restrictions is possible by Q4

• We anticipate a swift bounce back in activity in a normalised environment, suggesting a positive F2022 with the business in good shape

• Asia produced a remarkably good H1 and we anticipate an improved full-year result • South Africa’s mix of foodservice and manufacturing is easing the path through COVID• Latin America and Turkey will remain difficult but the Middle East should have a better H2

• The EU vaccination strategy has been poorly executed, delaying economic recovery • Our businesses have coped with an unprecedented situation and will ride it out

An entrepreneurial and decentralised model

Our growth is organic, acquisitive-organic

through bolt-ons, and acquisitive; we seek

value when we acquire and have the balance sheet capacity to be opportunistic at the

right time

Whatever the future holds we have the

people and financial strength to weather unpredictable and challenging times


Notes

FINANCIALDavid Cleasby


Notes


Highlights• Revenue R60,8 billion (↓10,9%) with constant FX revenue R53,3 billion

(↓21,9%)

• Gross margin slightly down at 23,4% (H1F2020: 23,8%)

• Free cash flows of R2,7 billion, up R1,8 billion from H1F2020

• Pandemic-era free cash flow generation of £158 million (excluding sale & leaseback transactions and dividends)

• Cash flow generated by operations (after working capital) of R3,7 billion;an excellent performance considering EBITDA of R3,0 billion

• Working capital days better by 8 days and net working capital lower by R1,9 billion vs. H1F2020

• Receivable provisioning % maintained based on our conservative estimates

• Non-IFRS 16 net debt at R2,6 billion (H1F2020: R4,9 billion) hasdeclined significantly

• Pandemic lockdowns from mid-October affected the UK and Europe; Q2 trading was EBITDA positive

• Headline Earnings R1,3 billion (↓46,2%)

• HEPS of 391,6cps (↓46,2%)

• No interim dividend declared, to be reassessed in August 2021

15

Good performance under circumstances supported by strong cash flow generationCurrency translation impacts positive for the period

3,04,3

5,7

H1F2021 H1F2020 F2020

EBITDA (R billion)

2,2

3,64,2

H1F2021 H1F2020 F2020

Trading profit (R billion)

27,5 25,9 27,7

H1F2021 H1F2020 F2020

Shareholder equity (R billion)

2,64,9 5,6

H1F2021 H1F2020 F2020

Net debt (R billion)


Notes


• Revenue (in constant currency) (↓21,9%). Sales in Europe and the UK hard hit from Q2F2021 (tracking at 41% of F2020 comparatives) as second COVID waves took hold in the northern hemisphere

• Gross profit % held up well at 23,4% (H1F2020: 23,8%) considering the trading environment. Some focus on price discounting to gain market share and liquidating inventories due to the suddenness and severity of government-imposed lockdowns

• Operating expenses managed well. Cost of doing business increases to 19,7% from 18,5%, driven by:• Lower revenues• Receivable provisioning levels maintained based on our conservative estimates

(10,7% of the gross debtors' book vs. 10,9% at June 2020)• Operating leverage will improve as markets return to normality• Government employment assistance has helped, but related to government

furlough schemes• No further significant COVID-related costs incurred in the period

• Non-IFRS 16 net interest up 1,1% to R172,8 million. Excluding FX of R16,6 million and imputed interest on the DAC put option of R23,3 million, non-IFRS 16 net interest ↓22% driven by better asset management and strong free cash flows despite lower profitability

• Capital profits of R192 million (post-tax) mostly related to capital profits concludedon sale & leaseback transactions (R585 million) offset by impairments to PPE (R264 million) (Czech Kralupy fire a contributor) and intangible assets (R156 million)

• Effective tax rate up at 28,4% (H1F2020: 24,2%) (excluding associate income and capital items). Change in the group’s profit mix being dominated by Australasia who have higher tax rates (Australia 30% and New Zealand 28%). The effective tax rate should normalise back to 25% as profitability improves in the UK and Europe

16

Statement of profit Operations have continued to demonstrate their resilience and flexibility through the pandemic

23,4%19,7%

23,8%

18,5%

24,1%20,7%

-4%

1%

6%

11%

16%

21%

26%

Gross profit % Total expenses %

H1F2021 H1F2020 F2020

5,0%

3,7%

6,3%

5,2%4,7%

3,4%

0%1%2%3%4%5%6%7%

EBITDA margin % Trading profit margin %

H1F2021 H1F2020 F2020


Notes


• Cash generated from operations before working capital ↓7,8% at R3,7 billion (H1F2020: R4,1 billion) • 107% of EBITDA and 144% of trading profit (H1F2020: 101% of EBITDA and 120% of trading profit)• Non-cash items mainly comprise profit on sale & leaseback transactions, impairments to PPE & intangible assets

• Working capital• R0,5 billion generated in H1F2021 vs R0,2 billion absorbed in H1F2020; net monthly average working capital cycle now 6 days (H1F2020: 14 days)• Receivables, inventories, and payables all declined in absolute terms as we continued to work with our customers and suppliers alike during the

ongoing COVID pandemic• Inventory days are slightly higher due to some excess stocking due to global supply chain disruptions and product availability• Net working capital % of annualised revenue (WCR%) of 3,1%. The groups’ normal WCR% is between 4% - 5%. There may be working capital absorption

as markets reopen from government-imposed restrictions and normalise

• Cash effects of investing activities of R0,4 billion (cash inflow)• Proceeds of R1,5 billion relating to the sale & leaseback transactions concluded as part of our property maximisation strategy in terms of

end-of-useful-life properties, where we are taking advantage of very low yields currently being achieved in many markets on industrial property• Investments in PPE reflecting largely maintenance capex and some investment necessary for anticipated organic growth

• Non-IFRS 16 net debt at R2,6 billion (H1F2020: R4,9 billion) has declined significantly, benefitting from a much-improved working capital position and the proceeds arising out of the sale & leaseback transactions. In hard currencies, our net debt at £128 million is better than June 2020 of £261,5 million and compared to December 2019 of £269 million

• Cash and cash equivalents of R7,0 billion (H1F2020: R5,3 billion – continuing operations)

17

Cash flows Excellent free cash flows


Notes

Unaudited Results for the half year ended December 31 2020 18

BIDCORP GROUP CASH FLOW EVOLUTIONMarch 2020 to February 2021

( 500)

( 450)

( 400)

( 350)

( 300)

( 250)

( 200)

( 150)

( 100)

2020

/03/

01

2020

/03/

15

2020

/03/

29

2020

/04/

12

2020

/04/

26

2020

/05/

10

2020

/05/

24

2020

/06/

07

2020

/06/

21

2020

/07/

05

2020

/07/

19

2020

/08/

02

2020

/08/

16

2020

/08/

30

2020

/09/

13

2020

/09/

27

2020

/10/

11

2020

/10/

25

2020

/11/

08

2020

/11/

22

2020

/12/

06

2020

/12/

20

2021

/01/

03

2021

/01/

17

2021

/01/

31

£ million F2020/F2021 F2019/F2020

#1

#3#4

#2

Group cash flow evolution

• (#1) Cash received on the HK sale & leasebackHK$316 million received (net of transaction costs)

• (#2) Intergroup payment banking timing difference

• (#3) Cash received on the Girraween sale & leasebackA$72,3 million received (net of transaction costs)

• (#4) Cash levels on January 31st 2021 are better by£154 million when compared to prior year


Notes


• Sturdy balance sheet underpinned by reliable cash flows allows the group to weather the foreseeable future of the COVID crisis

• Balance sheet strength will allow flexibility to achieve strategic growth objectives, organic and acquisitive

• Shareholders equity increased by retained profit but offset by negative FCTR movements due to GBP/EUR closing FX rates being lower by 6% to 8%

• Liquidity management• Short-term debt (R5,3billion) < Cash (R7,0billion); all debt defacto long term• Liquidity available of R20,4 billion (including undrawn facilities and

cash and cash equivalents)• Risk management (no change in practice or policy)

• Debt is matched to the underlying assets for a natural hedge; mixture of fixed (long-term funding) and floating interest rates (short-term funding)

• Solvency• Debt to equity ratio 9% (H1F2020: 19%)• Net debt to annualised EBITDA 0,4x (H1F2020: 0,6x)• EBITDA interest cover 16,8x (H1F2020: 24,0x)• Net debt in hard currencies = £128 million which is better by £141 million

than H1F2020

19

Financial position Financial position remains strong

27,7

26,2

27,9

2,6

4,95,6

1.01.52.02.53.03.54.04.55.05.56.06.57.0

25.0

25.5

26.0

26.5

27.0

27.5

28.0

28.5

H1F2021 H1F2020 F2020

Equity R billion Net debt R billion

16,8

24,0

15,8

9,3%

19,3% 20,2%

0%5%10%15%20%25%30%35%40%45%50%

0.0

5.0

10.0

15.0

20.0

25.0

H1F2021 H1F2020 F2020

EBITDA interest cover x Net debt to equity %


Notes


• The UK and Europe sales should bounce back quickly once imposed restrictions are relaxed, but when these restrictions will be relaxed is uncertain

• Financial base supportive of business to recover as discretionary spend in various markets returns• Bidcorp has remained cash generative and profitable through H1F2021• Debt to equity ratio low at 9% with ample headroom to fund our organic and acquisitive growth• Absorption of working capital in H2F2021 expected as markets begin to reopen• Liquidity focus for H2F2021 of rolling over short-term debt into term facilities, funding market conditions dependent• Strength of the financial position continues to provide a cushion for the impacts of COVID; Bidcorp operates a decentralised operating model across

more than 35 different countries and 20 different currencies• H2F2021 capex anticipated for the UK and Europe, investment expected to match depreciation and amortisation; Australasia expected to invest for

anticipated organic growth• Core philosophy of naturally hedging assets and liabilities remains

• Businesses are managed and measured in their local currencies, consolidation of market positions core driver of the businesses at the moment

• Forecasting risk remains high due to ongoing uncertainty – we believe our provisioning is conservative and our best estimate at the moment• Currency volatility likely to remain a feature into H2F2021; ZAR is the reporting currency however non-ZAR trading profits 90% of group• International shareholder base stable at 50%• Bidcorp not providing growth projections for F2021 until more visibility on sustainable economic recovery in each operating geography

20

Financial guidanceSound financial position supportive of recovery when it comes


Notes

Q&A


Notes

SUPPLEMENTARY INFORMATIONFinancial analysis


Notes


R millionQ1

F2021Q1

F2020 %Q2

F2021Q2

F2020 %H1

F2021H1

F2020 %

Constant currencyH1F2021 %

Australasia 8 104,3 7 802,3 3,9 8 555,5 8 030,9 6,5 16 659,8 15 833,2 5,2 14 314,9 (9,6)

United Kingdom 7 602,1 8 372,5 (9,2) 6 012,7 9 414,8 (35,2) 13 614,8 17 787,3 (23,5) 11 855,0 (33,4)

Europe 12 415,8 12 115,7 2,5 7 123,7 10 924,4 (34,8) 19 539,5 23 040,1 (15,2) 16 795,1 (27,1)

Emerging Markets 5 095,9 5 546,1 (8,2) 5 856,3 6 008,7 (2,5) 10 952,2 11 554,8 (5,2) 10 335,5 (10,5)

Total 33 218,1 33 836,6 (1,8) 27 548,2 34 378,8 (19,9) 60 766,3 68 215,4 (10,9) 53 300,5 (21,9)

23

Segmental revenue


Notes


Segmental trading profit

R millionH1

F2021Margin

%H1

F2020Margin

% %


Bidfood 2 294,7 3 626,0 (36,7) 2 019,6

Australasia 1 119,9 6,7 1 045,9 6,6 7,1 962,2 (8,0)

United Kingdom 295,7 2,2 909,4 5,1 (67,5) 252,9 (72,2)

Europe 429,6 2,2 1 098,9 4,8 (60,9) 376,6 (65,7)

Emerging Markets 449,5 4,1 571,8 5,0 (21,4) 427,9 (25,2)

Corporate (55,0) (46,7) (49,9)

Total 2 239,7 3,7 3 759,3 5,2 (37,4) 1 969,7 (45,0)


Notes

SUPPLEMENTARY INFORMATIONFinancial analysis


Notes


Financial impact of COVID

26

Credit risk• There was a material change in the group’s exposure to credit risk and its

objectives, for managing and measuring the risk during Q3 and Q4 of F2020 due to the impact of COVID. This impact was factored into the expected credit loss (ECL) for trade receivables for the group as the average ECL increased from 4,5% (June 2019) to 10,9% (June 2020)

• Many of Bidcorp’s customers, including those in the restaurant and hospitality industry, have operated or are operating at substantially reduced volumes due to governmental lockdowns or other social-distancing measures

• Through H1F2021 collections have been maintained, however, due to the ongoing uncertainties surrounding COVID and with it more widespread and longer in duration, risks of further COVID waves heightens the potential for further economic fallouts. Credit insurance availability in many markets is being reduced because of the hospitality industry impacts which places further pressure on our customer base

• The group's ECL ratio has been maintained at levels around 10,7% of trade receivables. While Bidcorp traditionally incurs bad debt expense, the magnitude of such expenses and benefits the group has experienced, is not indicative of normal operations

Liquidity risk• During the COVID pandemic the group’s priority has been to ensure that

operations have sufficient liquidity for their respective requirements• The group believes that it has sufficient liquidity for the foreseeable future; the

group and its subsidiaries have available to it, as at December 31st 2020,undrawn facilities of R13,4 billion (£672 million) and cash and cash equivalents of R7,0 billion (£348 million)

Revenue• Group sales (in constant currency) for the financial YTD peaked in the week ended

August 2nd 2020 at 87% versus the corresponding week in F2020 but had eased to an average of 78% for the half year ended December 31st 2020

• The group’s businesses continue to operate in each geography; however, each country is at a different stage of the COVID crisis. Harsh second waves particularly in Europe and UK have had a significant impact on the group’s performance and this looks likely to continue through the northern hemisphere winter. Fortunately, the group has a diversified business, with Australia, New Zealand, and Asia doing well, and our other Emerging Market constituents continuing to improve on a month-to-month basis

• The resurgent second COVID wave across Europe and the UK has impacted Q3F2021 revenues to date as Europe and the UK are operating at levels between 54% - 58% and39% - 45% respectively. We remain confident that these markets will recover swiftly once restrictions are lifted

Inventory and margins• The gross profit percentage has held up well considering the trading environment at 23,4%

(H1F2020: 23,8%). The group has experienced margin pressures given the following:• Sharpness and suddenness of government lockdowns has resulted in liquidating

short-dated stock at lower margins• A business decision to maintain “the right” customer and in certain instances grow

market share• Customers have spent more time on tender processes due to limited trading hours

• As of December 31st 2020, the groups’ stock obsolescence was 4,1% (R400 million) of gross inventory. Stock provisions have generally been maintained over H1F2021 due to the unpredictability and suddenness of government lockdowns which has necessitatedshort-dated stock being liquidated


Notes


R millionQ1

F2021Q1

F2020 %Q2

F2021Q2

F2020 %H1

F2021H1

F2020 %


Revenue 33 218,1 33 836,6 (1,8) 27 548,2 34 378,8 (19,9) 60 766,3 68 215,4 (10,9) 53 300,5 (21,9)

27

Consolidated statement of profit or loss

• Revenue declined 10,9% to R60,8 billion (H1F2020: R68,2 billion). Group sales (in constant currency) for the financial YTD peaked in the week ended August 2nd 2020 at 87% versus the corresponding week in F2020 but had eased to an average of 78% for the half year ended December 31st 2020Segmental revenue

• Australasia: R16,7 billion (H1F2020: R15,8 billion). Australia has shown consistent quarterly sales improvements (Q4F2020 ↓22%; Q1F2021 ↓19%; Q2F2021 ↓8% compared to PY comparatives). Shipping / cruise line and main metro markets (including hotels and food outlets) remain subdued. New Zealand held up tracking similar levels to H1F2020 and should get a boost when international tourists return

• United Kingdom: R13,6 billion (H1F2020: R17,8 billion). Bidfood UK had a positive first trading quarter with social mixing rules relaxed and education returning. In Q2F2021, the UK was hit with a second wave of COVID which led to UK government encouraging people to stay and work from home. This impacted both the workplace catering and restaurant sectors. For H1, Bidfood UK total sales volumes were ↓23% down. Fresh UK is heavily focused on the hospitality sector, with 73% of customers predicated to pubs, hotels, restaurants, stadia, and events. Fresh UK monthly sales for H1F2021 peaked in August at 61% of F2020 but has been hard hit from October averaging 32% of F2020

• Europe: R19,5 billion (H1F2020: R23,0 billion). The resurgence of COVID cases has forced governments to impose restrictions which has impacted trading performance from October 2020. Q2F2020 revenue performance in constant currency was ↓41,1% of F2020 comparatives

• Emerging Markets: R11,0 billion (H1F2020: R11,6 billion). Sales for the Emerging Markets have continued to improve quarter-on-quarter (Q4F2020 ↓24%; Q1F2021 ↓18%; Q2F2021 ↓4% compared to PY comparatives)

• The group remains confident that the UK and Europe markets will recover swiftly once restrictions are lifted


Notes


R millionH1

F2021H1

F2020 %Constant currency

H1F2021 %

Revenue 60 766,3 68 215,4 (10,9) 53 300,5 (21,9)

Gross profit % 23,4% 23,8% (1,7)

Trading profit 2 239,7 3 579,4 (37,4) 1 969,7 (45,0)

Non-IFRS 16 EBITDA 2 903,3 4 100,2 (29,2) 2 552,0 (38,8)

28


• Gross profit %Margins held up well considering the trading environment at 23,4% (H1F2020: 23,8%). In Q2F2021, the group has experienced margin pressures given the combination of some operations liquidating inventories because of the suddenness and severity of government-imposed lockdowns and a focus on some price discounting to gain market share particularly in Q2

• Operating expensesThe group’s overall cost of doing business increased to 19,7% (H1F2020: 18,5%) due to lower revenues; however, represents an absolute cost saving where constant currency costs declined by 17,0% against a decline in constant currency revenues of 21,9%. No further significant COVID-related costs were incurred in the periodSignificant effort is being directed at staff retention and their well being to ensure that our operations are ready and able to accommodate the resumption of activity as and when it materialises


Notes


R millionH1

F2021H1


H1F2021 %

Revenue 60 766,3 68 215,4 (10,9) 53 300,5 (21,9)

Trading profit 2 239,7 3 579,4 (37,4) 1 969,7 (45,0)

Net finance costs (364,2) (329,2) (10,6) (322,8) 2,1

29


Associates and JVs 19,3 34,1 19,4

• Finance costs are higher due to:• Forex impact of R41,4 million• Finance costs on the unwinding of the DAC Italy put option – R23,3 million (non-cash item)

• Excluding these impacts net finance charges were lower by R29,7 million or 9% arising out of the better asset management and strong free cash flows despite lower profitability

• Bidcorp remains well-capitalised and retains adequate headroom for further organic and acquisitive growth. Non-IFRS 16 EBITDA interest cover is at a healthy 16,8x (H1F2020: 24,0x)

• Principally attributable to the ChipkinsPuratos joint venture (JV) interest in South Africa, a 38% interest in Blancaluna Grupo (a broadline foodservice wholesaler in Argentina) and investments by Bidfood Netherlands into various specialist product businesses


Notes


R millionH1

F2021H1


H1F2021 %

Revenue 60 766,3 68 215,4 (10,9) 53 300,5 (21,9)

Trading profit 2 239,7 3 579,4 (37,4) 1 969,7 (45,0)



Taxation (515,3) (769,8) 33,1 (452,9)

30


H1F2021 %

H1F2020% Comment

Effective tax rate(ex capital items and associates and JV’s)

28,4 24,2 The tax clean rate of 28,4% (H1F2020: 24,2%) is above normal group tax ratesThis is due to the change in the group’s profit mix being dominated by Australasia who have higher tax rates (Australia 30% and New Zealand 28%). The groups’ tax effective rate should return to an effective rate of 25% as profitability levels return across Europe and the UK


Notes


R millionH1

F2021H1


H1F2021 %

Revenue 60 766,3 68 215,4 (10,9) 53 300,5 (21,9)

Trading profit 2 239,7 3 579,4 (37,4) 1 969,7 (45,0)



Taxation (515,3) (769,8) 33,1 (452,9)

Non-controlling interests (16,6) (22,9) (15,4)

Headline earnings 1 308,3 2 431,2 (46,2) 1 148,3 (52,8)

HEPS (cps) 391,6 728,3 (46,2) (343,7) (52,8)

31


Headline earnings:• Net capital pre-tax gain of R190 million:

R686 million capital profit realised on sale & leaseback transactions concluded in HK and Australia, impairment of PPE of R319 million (Kralupy fire a contributor), impairment of intangible assets R210,7 million and insurance proceeds of R34 million to be received on the Kralupy fire


Notes


R million Dec 31 2020 Dec 31 2019 June 30 2020Non-current assets 38 855,9 36 454,8 42 088,8Property, plant and equipment 16 105,3 14 808,1 17 618,4Right-of-use lease assets 4 364,4 4 192,9 4 934,2Goodwill 15 676,5 14 934,3 16 676,6Other non-current assets 2 709,7 2 519,5 2 859,6Current assets 28 237,8 34 484,7 29 509,6Inventories 9 446,3 9 823,5 10 195,5Trade and other receivables 11 825,5 15 191,5 12 289,7Assets classified as held-for-sale - 4 166,8 -Cash and cash equivalents 6 966,0 5 302,9 7 024,4Total assets 67 093,7 70 939,5 71 598,4Equity 27 737,0 26 155,9 27 938,6Non-current assets 14 852,0 15 182,9 16 000,9Long-term borrowings 4 243,2 5 500,3 4 565,0Long-term right-of-use lease liabilities 5 137,1 4 527,2 5 363,1Long-term puttable NCI liability 4 249,9 3 805,7 4 632,7Other non-current liabilities 1 221,8 1 349,7 1 440,1Current liabilities 24 504,7 29 600,7 27 658,9Trade and other payables 17 534,8 18 861,8 17 602,2Short-term right-of-use lease liabilities 807,8 622,5 872,2Short-term borrowings 5 292,1 4 752,4 8 046,0Liabilities held for sale - 4 605,0 -Other current liabilities 870,0 758,5 1 138,5Total equity and liabilities 67 093,7 70 939,5 71 598,4

• Property, plant and equipment• Movement from June 30 reflected by sale & leaseback transactions, lower FX closing rates and gross

investments in PPE reflecting largely maintenance capex and some investment necessary for anticipated organic growth

• Working capital management• Net working capital of R3,7 billion (H1F2020: R6,2 billion)• Working capital days better by 8 days• Significant focus on working capital ensured strong cash generation of R0,5 billion• Receivables, inventories, and payables all declined in absolute values as we continued to work with our

customers and suppliers alike during the ongoing COVID pandemic

• Liquidity management• Short-term debt (R5,3 billion) < Cash (R7,0 billion)• Gross borrowings of R10,4 billion, 92% is non-South African• Liquidity available of R20,4 billion (including undrawn facilities and cash and cash equivalents)

• Solvency (excluding IFRS 16)• Debt to equity ratio 9% (H1F2020: 19%)• Net debt to annualised EBITDA 0,4x (H1F2020: 0,6x)• EBITDA interest cover 16,8x (H1F2020: 24,0x)• Net debt in hard currencies = £128 million which is better by £141 million than H1F2020

• IFRS 16 impact• Net debt including IFRS 16 = R8,5 billion• Leasehold properties comprise 89% of the lease liability. Average property lease term of 9 years

• Long-term puttable NCI liability• DAC Italy 40% put option was renegotiated in December 2019. Key terms include a 5-year lock-in period

• Assets and liabilities held-for-sale • Discontinued operations, Best Food Logistics and PCL distribution in the UK, were successfully exited in

March 2020

• NAV per share = R82,01 (↓0,6% from June 2020)

Consolidated statement of financial position


Notes


Consolidated statement of cash flows

33

(2,8)

0,4

(0,8)

(0,3)

0,5

3,2

4 3 2 1 0 1 2 3 4

Half year ended Dec 31 2020 (R billion)

Cash generated from ops pre wc

Working capital generated (utilised)

Net finance charges

Taxation

Dividends paid

Cash effects of investment act’s

Cash effects of financing act’s

Half year ended Dec 31 2019 (R billion)

• 167% of H1F2021 trading profit was turned into cash (H1F2020: 113%)• Free cash inflow (excluding dividends paid but including lease payments) of R2,7 billion (H1F2020: cash inflow of R855 million) • Ongoing focus on working capital through the period, ensured strong cash generation of R0,5 billion, an improvement on the R0,2 billion utilised in the comparative year• Pandemic-era free cash flow generation of £158 million (wef February 2020) (excluding sale & leaseback transactions and dividends)• Investment activities

• Proceeds received of R1,5 billion relating to the sale & leaseback transactions concluded as part of our property maximisation strategy in terms of end-of-useful-life properties, where we are taking advantage of very low yields currently being achieved in many markets on industrial property

• Gross capex of revenue was 1,6% (H1F2020: 2,2%)• Gross capex was 1,2x (H1F2020: 2,2x) of depreciation and amortisation, reflecting largely maintenance capex and some investment necessary for anticipated organic growth

(0,8)

(1,6)

(1,1)

(1,0)

(0,3)

(0,2)

4,3

2 1 0 1 2 3 4 5


Notes


(63) (68) (67) (69)

35 37 34 37

42 37 41 36

Continuing operations net working capital days

34

8

Debtors days

Stock days

Creditors days

Net days

• Net 7-month rolling average working capital days improved by 8 days to 6 days• Impacts in H1F2021:

• Significant focus on working capital, ensured strong generation of R0,5 billion and December month-end working capital days dropping to 4 days

• Inventory days are higher due to some excess stocking due to global supply chain disruptions and product availability

14

7-month rolling average working capital days

H1F2020 H1F2021

46

December month-end working capital days

H1F2021 H1F2020


Notes


Cash generated by operations, net working capital, and cash conversion

35

Working capital vs cash generatedby operations

% cash conversion of CGObefore working capital

% cash conversion of CGOafter working capital

(0,2)

1,4 1,20,5

4,1 4,3

8,4

3,7

H1F2020 H2F2020 F2020 H1F2021

Net working capital Cash generated by operations

101% 107%120%

144%

H1F2020 H1F2021

EBITDA Trading profit

95%

124%113%

167%

H1F2020 H1F2021

EBITDA Trading profit

R billion

• Strong cash conversion remained in H1F2021• EBITDA includes R420 million for RoU lease amortisation (H1F2020: R355 million)• Forward looking into H2F2021 there may be working capital absorption as markets reopen from

government-imposed restrictions

• Working capital generation from H2F2020 continued into H1F2021

• Pandemic-era working capital generation of R1,9 billion

CGO – Cash Generated from Operations


Notes


Gearing (Non-IFRS 16)

36

4,7 5,1 5,6 2,6

28,0

24,0

15,8 16,8

0.0

5.0

10.0

15.0

20.0

25.0

30.0

F2019 H1F2020 F2020 H1F2021-1.0

1.0

3.0

5.0

7.0

9.0

11.0

13.0

15.0

Net interest-bearing debt (R billion) EBITDA interest cover (x)

Current EBITDA: net debt covenant – Net debt to be lower than R14,5 billion

• A conservative approach to gearing with EBITDA interest cover at 16,8x (F2020: 15,8x)Exceeds group covenant of 5x

• Net debt to annualised EBITDA of 0,4x (H1F2020: 0,6x)

• Ample headroom to fund organic or acquisitive expansion

Interest covenant – 5x


Notes

SUPPLEMENTARY INFORMATIONBidcorp historical results

37 Bid Corporation Limited Investor Presentation for the half-year ended December 31 2020

Notes


Bidcorp historic performance

30,4

20,615,9

11,0

H1F2020 H1F2021

%

Continuing operations returns % (annual)

ROFE ROE

3,6 3,664,97 5,07 5,16

3,43 3,69

PF 2015 PF 2016 F2017 F2018 F2019 F2020 H1F2021

%Trading margin

241 250 280 310 330

250 280330

2016 2017 2018 2019 2020 2021

cps

Dividend per share (cents)

500560

640

407,6 499,1 600,3 640,0 700,2 728,3391,6

407,6580,9 580,7 641,9

743,413,0

PF 2015 PF 2016 F2017 F2018 F2019 F2020 H1F2021

cps

Headline earnings per share

1282,91181,01080,0

1443,6

815,2741,3

◼ H1 ◼ H2* PF2015 and PF2016 = Pro forma (Includes disposed UK Logistics operations)


UNAUDITED RESULTS - bidcorp-reports.com...Bid Corporation Limited Investor Presentation for the half...

Documents

Transcript of UNAUDITED RESULTS - bidcorp-reports.com...Bid Corporation Limited Investor Presentation for the half...